INVESTING IN KOLKATA REAL ESTATE
Hardeep Lamba, Managing Director, North & East India, Land & Capital Market, Cushman & Wakefield, speaking about the characteristic of the city stated, “The key difference which we see between other cities and Kolkata, especially when it comes to real estate is that the formal form of lending has still not penetrated the city real estate, both consumer and at the developer side. That is one of the reasons we do not see large scale institutional investments happening in Kolkata.” The unique character of Kolkata's market is underscored by its notably lower utilization of for- mal financing methods in property transactions, agreed Anand Lakhotia, Managing Director & Co- Head, Motilal Oswal Real Estate, “Kolkata's market shows potential akin to Chennai, exhibiting sub- stantial growth in terms of sales volume and area, thus drawing IT sector interest for post-pandemic expansion. The city presents fertile opportunities for development and investment, bolstered by increased access to funds for land purchases and ongoing government auctions, with Motilal Oswal leading the way in strategic partnerships for land development projects.” He further stated, “Unlike NBFCs, which are regulated by the RBI, our AIF funds operate with considerable autonomy, allowing us to tailor our transactions to meet developers' needs, particularly for land acquisi- tion where the demand for capital is greatest. Over the past decade, we have emerged as one of the most active domestic real estate funds in India, having facilitated over 150 transactions focused on this initial stage of development and we are interested in tapping the eastern India real estate.” Elucidating the role that finan- cial institutions have played in his developments to date, and how he foresees their involvement in the future, Manab Paul, Founder, Sree Balaji, said, “My company proudly operates with zero debt, selling real estate incrementally, which, despite a higher unit price compared to traditional projects, carries a sig- nificantly larger profit margin due to our low land acquisition costs of 100 to 150 rupees per square foot. We strategically acquire land in piec- es for project expansion based on viability, a method that has yet to involve financial institutions. However, discovering Motilal Oswal funds land acquisitions has opened up a promising avenue we intend to explore in the future.” He further stated, “Urban Land Cessation (ULC) poses a significant challenge for city developers due to the creation and maintenance of numerous subsidiary companies, accounting for 5-6% of project costs and substantial time investments—issues that I've avoided in smaller cities over the past decade, demonstrating both time savings and considerable cost reductions.” Sharing his insight into how some major shifts can significantly influence the financing landscape,N.G. Khaitan, Sr. Partner, Dispute Resolution, Real Estate, Khaitan & Co, articulated, “I strongly suggest revoking of Urban Land Selling and Regulation Act, which is unique to West Bengal. After discussing with West Bengal's Industry Minister, my suggestions on housing sector re- sulted in a comprehensive report.” He further stated, “In 1953, the West Bengal government, initiated land reform by passing the State Acquisition and Tenancy Act, which imposed land ownership ceilings and preserved homesteads and fisheries. Subsequent legislation in 1955 redistributed land, transform- ing landowners into 'Raiyats', and later amendments reinforced state control over these lands. Although the Supreme Court approved limited leasing to former owners in 2009, the equitable enforcement of agri- cultural land ceiling remains conten- tious, with urban land ceiling policies in West Bengal awaiting further clarification. During prior consultations, I emphasized to the former Minister for Urban Development, the necessity of repealing legislation that hampers the prosperity of the sector, which he concurred. In Parliament, he advocated for the repeal of the Urban Land Ceiling Act to facilitate real estate growth and strengthen economic pillars such as housing and transportation of the state.” Pratiik Jalan added, “if we want an institutional player to come and invest in West Bengal, they would typically look at 100-150 acres. Now the moment we want to do that, we have to involve 10-15 companies. Because the Urban Land Ceiling Act says that we have a limitation of 24 acres of industrial land in a company and agricultural is 17 acres. So, we have to first acquire agricul- ture land and then get it converted into industrial. Only then the ceiling increases and even then, 24 acres is not much for any big industry or for an institutional financier. If this particular law is changed, then Kolkata will see plenty of investments from financial institutions.” Raj Vardhan Patodia, Founder, Chairman and Managing Director, Signum Group, stated on an optimistic note, "Well-developed infrastructure serves as a city's showcase, enhancing accessibil- ity and affordability in housing, thus attracting investors who value robust civic amenities and are more inclined to engage in real estate ventures. Logistical opera- tions are expanding significantly in this region, spurred by the recent announcement of new data cen- tres and accelerated by the swift development of infrastructure. The auction of land by the government has attracted substantial investments from major entities outside Kolkata, promising further economic growth.” EXPLORING EASTERN INDIA’S POTENTIAL Discussing the prospects for significant investment from the sixth fund into Kolkata's real es- tate market, Anand Lakhotia said, “The current land registration pro- cess, unique to this city, requires streamlining and digitization similar to other cities to ensure a more ef- ficient acquisition timeline and in- vestor-friendly environment capable of attracting significant institutional capital. But, if I have to compare to 10 years back, there are a lot of developers that have grown their business and with whom we can invest, I think overall the market has improved a lot.” Manab Paul added, “Each region operates distinctly, with West Bengal's approach characterized by deliberation and consistency; however, the post-COVID era has significantly accelerated our pace, offering a thriving stage for invest- ments across varied real estate sectors. Despite global challenges, Bengal's market remains reliably robust compared to other regions, affirming our stability and invest- ment potential.” N.G. Khaitan expressed, “I was born in Calcutta and have lived here all my life, earning my name and fame in the city. I consider myself an ambassador of West Bengal and Kolkata. Many of us are suffering due to the reputa- tion inherited from the previous left-wing government, which I am confident will change.” Addressing on the industrial warehousing sector of the state Pratiik Jalan, Director, Jalan Builders, said, “Kolkata has the potential to be one of the biggest economies in the country. It is a highly con- suming state, but it lacks industries. Recently, we have focused on leas- ing spaces to industries rather than warehousing, following the trends of other developed cities like Delhi, Bombay, and Chennai.” Raj Vardhan Patodia added, “Despite the challenges, significant progress is being made, with new infrastructure and with ongoing improvements, the city's image is changing, attracting investors eager to fund land development.” Our industry must reshape the negative perceptions about Kolkata, commonly held by multinational corporations by highlighting ongoing developments and encouraging investment in the state - Pratiik Jalan The current land registration process, unique to this city, requires streamlining and digitization similar to other cities to ensure a more efficient acquisition timeline and investor-friendly environment capable of attracting significant institutional capital- Anand Lakhotia Urban Land Ceiling Act is a significant challenge for city developers due to the creation of numerous subsidiary companies, accounting for 5-6% of project costs and substantial time investment- Manab Paul The auction of land by the government has attracted substantial investments from major entities outside Kolkata, promising further economic growth- Raj Vardhan Patodia With road and port infrastructure improvements, such as the Bharat Mala project, and the metro, I believe Kolkata has much tobe proud of and attract more investments- Hardeep Lamba Urban Land Ceiling Act (ULC) remains the biggest deterrent in the long-term growth of the real estate market of West Bengal- N.G. Khaitan
Tags : Hardeep Lamba Cushman & Wakefield Motilal Oswal Real Estate Anand Lakhotia Manab Paul Sree Balaji N.G. Khaitan Khaitan & Co Raj Vardhan Patodia Signum Group Pratiik Jalan Jalan Builders